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When consumers deal with banks, insurers and other financial institutions, they are entitled to be treated fairly. The Conduct of Financial Institutions (CoFI) regime was introduced to strengthen consumer protections by requiring financial institutions to place consumers' interests at the centre of their operations. Understanding these obligations can help consumers recognise unfair treatment and understand the options available to resolve disputes and seek compensation where appropriate.
Following joint reviews into the conduct of insurers in New Zealand, the Reserve Bank of New Zealand and the Financial Markets Authority (FMA) found that financial institutions lacked adequate systems and processes to ensure consumers were being treated fairly. These findings led to the Financial Markets (Conduct of Institutions) Amendment Act 2022 (CoFI Act), which introduced a new regulatory framework designed to improve consumer outcomes and accountability within the financial services sector.
The CoFI Act established what is now known as the Conduct of Financial Institutions (CoFI) regime. The regime sets conduct obligations for registered banks, licensed insurers and licensed non-bank deposit takers when providing products and services to consumers.
At the heart of the CoFI regime is the fair conduct principle, which requires financial institutions to treat consumers fairly. This includes paying due regard to consumers' interests and helping them make informed decisions. Financial institutions must act ethically, transparently and in good faith, and must not subject consumers to unfair pressure, tactics or undue influence.
The fair conduct principle applies throughout the entire consumer relationship. It covers the design, offering and delivery of products and services, as well as interactions with consumers, including claims handling and complaints management. The obligation also extends to situations where intermediaries are involved in providing products or services.
Because fair treatment is an ongoing obligation, financial institutions are now required by the FMA to establish and maintain a fair conduct programme.
Since 31 March 2025, all registered banks, licensed insurers and licensed non-bank deposit takers providing services to consumers in New Zealand must hold a financial institution licence under the CoFI Act.
As a condition of that licence, institutions must establish, implement and maintain a fair conduct programme. These programmes translate the fair conduct principle into day-to-day business practices through policies, processes, systems and controls designed to support compliance.
At a minimum, a fair conduct programme must include systems and processes to:
The CoFI Act has significantly expanded the FMA's role, which now includes licensing, monitoring and enforcement responsibilities. Through its outcomes-focused approach to regulation, the FMA has indicated that it intends to take a proactive approach to conduct issues that may result in poor consumer outcomes or undermine market integrity.
The FMA has also emphasised that, because of the broad scope of fair conduct programmes, they must be embedded within an institution's everyday operations and culture to be effective.
If you believe your bank, insurer or another financial institution has failed to comply with the fair conduct principle, or has not followed its published fair conduct programme, you have the right to make a complaint.
The first step is to raise the matter directly with the financial institution. This gives the institution an opportunity to investigate and resolve the issue internally. Many institutions also offer an internal review or appeals process if you are dissatisfied with the initial outcome.
If the complaint cannot be resolved, the institution will generally issue a letter confirming that the matter is deadlocked.
Once a deadlock letter has been issued, you may be able to escalate the complaint to the institution's external dispute resolution scheme. All licensed financial institutions must belong to an approved independent dispute resolution scheme
You can identify the relevant scheme by reviewing the institution's disclosure documentation or by searching the Financial Service Providers Register.
Your insurer will belong to one of two approved dispute resolution schemes[1]:
These independent bodies investigate complaints and provide dispute resolution services free of charge to consumers. It is generally advisable to lodge a complaint as soon as possible after receiving a deadlock letter.
Where a consumer has suffered direct financial loss as a result of a financial institution's conduct, compensation may be available through the relevant dispute resolution process. Depending on the circumstances, this may include unpaid claims, incorrect charges or other direct financial losses.
In some cases, compensation may also be available for non-financial loss, such as distress, humiliation, inconvenience or loss of opportunity. The availability and limits of compensation will depend on the rules of the relevant dispute resolution scheme and the specific facts of the complaint.
If you accept an Ombudsman's decision, it becomes binding on both parties. However, if you do not accept the decision, your legal rights remain unaffected and you may still be able to pursue the dispute through the Disputes Tribunal or the courts.
The CoFI regime represents a significant shift in New Zealand's financial services landscape by placing greater emphasis on fair treatment and consumer outcomes. Consumers who believe they have been treated unfairly should seek advice promptly, as there are established processes available to challenge decisions and, where appropriate, obtain compensation.
[1]Please note - In April 2024, Financial Services Complaints Ltd and the Insurance & Financial Services Ombudsman Scheme announced that they were evaluating a proposed merger with a target implementation date of 1 July 2025.However, as at 2026, no public update confirms that the merger has been completed, and both schemes continue to operate independently.
When consumers deal with banks, insurers and other financial institutions, they are entitled to be treated fairly. The Conduct of Financial Institutions (CoFI) regime was introduced to strengthen consumer protections by requiring financial institutions to place consumers' interests at the centre of their operations. Understanding these obligations can help consumers recognise unfair treatment and understand the options available to resolve disputes and seek compensation where appropriate.
Following joint reviews into the conduct of insurers in New Zealand, the Reserve Bank of New Zealand and the Financial Markets Authority (FMA) found that financial institutions lacked adequate systems and processes to ensure consumers were being treated fairly. These findings led to the Financial Markets (Conduct of Institutions) Amendment Act 2022 (CoFI Act), which introduced a new regulatory framework designed to improve consumer outcomes and accountability within the financial services sector.
The CoFI Act established what is now known as the Conduct of Financial Institutions (CoFI) regime. The regime sets conduct obligations for registered banks, licensed insurers and licensed non-bank deposit takers when providing products and services to consumers.
At the heart of the CoFI regime is the fair conduct principle, which requires financial institutions to treat consumers fairly. This includes paying due regard to consumers' interests and helping them make informed decisions. Financial institutions must act ethically, transparently and in good faith, and must not subject consumers to unfair pressure, tactics or undue influence.
The fair conduct principle applies throughout the entire consumer relationship. It covers the design, offering and delivery of products and services, as well as interactions with consumers, including claims handling and complaints management. The obligation also extends to situations where intermediaries are involved in providing products or services.
Because fair treatment is an ongoing obligation, financial institutions are now required by the FMA to establish and maintain a fair conduct programme.
Since 31 March 2025, all registered banks, licensed insurers and licensed non-bank deposit takers providing services to consumers in New Zealand must hold a financial institution licence under the CoFI Act.
As a condition of that licence, institutions must establish, implement and maintain a fair conduct programme. These programmes translate the fair conduct principle into day-to-day business practices through policies, processes, systems and controls designed to support compliance.
At a minimum, a fair conduct programme must include systems and processes to:
The CoFI Act has significantly expanded the FMA's role, which now includes licensing, monitoring and enforcement responsibilities. Through its outcomes-focused approach to regulation, the FMA has indicated that it intends to take a proactive approach to conduct issues that may result in poor consumer outcomes or undermine market integrity.
The FMA has also emphasised that, because of the broad scope of fair conduct programmes, they must be embedded within an institution's everyday operations and culture to be effective.
If you believe your bank, insurer or another financial institution has failed to comply with the fair conduct principle, or has not followed its published fair conduct programme, you have the right to make a complaint.
The first step is to raise the matter directly with the financial institution. This gives the institution an opportunity to investigate and resolve the issue internally. Many institutions also offer an internal review or appeals process if you are dissatisfied with the initial outcome.
If the complaint cannot be resolved, the institution will generally issue a letter confirming that the matter is deadlocked.
Once a deadlock letter has been issued, you may be able to escalate the complaint to the institution's external dispute resolution scheme. All licensed financial institutions must belong to an approved independent dispute resolution scheme
You can identify the relevant scheme by reviewing the institution's disclosure documentation or by searching the Financial Service Providers Register.
Your insurer will belong to one of two approved dispute resolution schemes[1]:
These independent bodies investigate complaints and provide dispute resolution services free of charge to consumers. It is generally advisable to lodge a complaint as soon as possible after receiving a deadlock letter.
Where a consumer has suffered direct financial loss as a result of a financial institution's conduct, compensation may be available through the relevant dispute resolution process. Depending on the circumstances, this may include unpaid claims, incorrect charges or other direct financial losses.
In some cases, compensation may also be available for non-financial loss, such as distress, humiliation, inconvenience or loss of opportunity. The availability and limits of compensation will depend on the rules of the relevant dispute resolution scheme and the specific facts of the complaint.
If you accept an Ombudsman's decision, it becomes binding on both parties. However, if you do not accept the decision, your legal rights remain unaffected and you may still be able to pursue the dispute through the Disputes Tribunal or the courts.
The CoFI regime represents a significant shift in New Zealand's financial services landscape by placing greater emphasis on fair treatment and consumer outcomes. Consumers who believe they have been treated unfairly should seek advice promptly, as there are established processes available to challenge decisions and, where appropriate, obtain compensation.
